Lowe's 2012 Annual Report Download - page 65

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Transactions related to restricted stock units for the year ended February 1, 2013 are summarized as follows:
Shares
(In thousands)
Weighted-
Average
Grant-Date
Fair Value
Per Share
N
onvested at February 3, 2012 ......................................................................... 202 $ 21.44
Granted ............................................................................................................. 97 27.84
Vested ............................................................................................................... (50 ) 15.69
Canceled or forfeited ........................................................................................ (43 ) 23.55
N
onvested at February 1, 2013 ......................................................................... 206 $ 25.40
ESPP
The purchase price of the shares under the ESPP equals 85% of the closing price on the date of purchase. The Company’s
share-based payment expense per share is equal to 15% of the closing price on the date of purchase. The ESPP is
considered a liability award and is measured at fair value at each reporting date, and the share-based payment expense is
recognized over the six-month offering period. During 2012, the Company issued 2.9 million shares of common stock and
recognized $13 million of share-based payment expense pursuant to the plan.
NOTE 10: Employee Retirement Plans
The Company maintains a defined contribution retirement plan for its eligible employees (the 401(k) Plan). Employees are
eligible to participate in the 401(k) Plan six months (180 days prior to January 1, 2011) after their original date of service.
Eligible employees hired or rehired prior to November 1, 2012 were automatically enrolled in the 401(k) Plan at a 1%
deferral rate, unless the employee elected otherwise. Employees hired or rehired November 1, 2012 or later must make an
active election to participate in the 401(k) Plan. The Company makes contributions to the 401(k) Plan each payroll period,
based upon a matching formula applied to employee deferrals (the Company match). Plan participants are eligible to
receive the Company match pursuant to the terms of the 401(k) Plan. The Company match varies based on how much the
employee elects to defer up to a maximum of 4.25% of eligible compensation. The Company match is invested identically
to employee contributions and is immediately vested.
The Company maintains a Benefit Restoration Plan to supplement benefits provided under the 401(k) Plan to participants
whose benefits are restricted as a result of certain provisions of the Internal Revenue Code of 1986. This plan provides for
employee salary deferrals and employer contributions in the form of a Company match.
The Company maintains a non-qualified deferred compensation program called the Lowe’s Cash Deferral Plan. This plan
is designed to permit certain employees to defer receipt of portions of their compensation, thereby delaying taxation on the
deferral amount and on subsequent earnings until the balance is distributed. This plan does not provide for Company
contributions.
The Company recognized expense associated with employee retirement plans of $151 million, $150 million and $154
million in 2012, 2011 and 2010, respectively.
NOTE 11: Income Taxes
The following is a reconciliation of the federal statutory tax rate to the effective tax rate:
2012 2011 2010
Statutory federal income tax rate ...................................................... 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefit ................................... 3.1 2.8 3.0
Other, net .......................................................................................... (0.5) (1.1) (0.3)
Effective tax rate ............................................................................. 37.6% 36.7% 37.7%